CHAPTER XL.CHARLES F. WOERISHOFFER.
The Career of Charles F. Woerishoffer, and the Resultant Effect upon Succeeding Generations.—The Peculiar Power of the Great Leader of the Bear Element in Wall Street.—His Methods as Compared with Those Other Wreckers of Values.—A Bismarck Idea of Aggressiveness the Ruling Element of His Business Life.—His Grand Attack on the Villard Properties, and the Consequence Thereof.—His Benefactions to Faithful Friends.
By the death of Charles F. Woerishoffer, Wall Street lost one of the most prominent figures which has ever shown up here. Mr. Woerishoffer died May 9, 1886. His career is one worthy of study by watchers of the course of speculation in this or any other country. The results of his life-work show what can be accomplished by any man who sets himself at work upon an idea, and who devotes himself steadily and persistently to a course of action for the development and perfection of the principle which actuates his life. Mr. Woerishoffer possessed peculiar personal qualities which are denied to most men and to all women. He had the magnetic power of impressing people with confidence in the schemes which he inaugurated; that is to say, he had the power of organization—the same power has made other men great, and will continue to make men great who possess it in all walks of life. Notable instances may be cited in the cases of Bismarck, Gladstone, Napoleon, Grant, and—coming down to Wall Street proper—Gould, Daniel Drew, old Jacob Little and the Vanderbilts, especially the Commodore, in his superior power of aggressiveness.
It has been said of Mr. Woerishoffer that he was fortunate. He was indeed. He was fortunate in the possessionof natural ability, and he had the aptitude to take advantage of events, and associate circumstances and the strength of purpose, and to direct, instead of following, the operations with which he became connected. He was the leader of the bear element of the Street—at least he was such during the period which marks his successful operations here. There is no doubt that the death of Mr. Woerishoffer was hastened because of the great strain of mind growing out of his business transactions. There is one point in this connection which has been overlooked by his biographers, namely, that his boldness in the magnitude of his dealings was resultant from a careless or non-calculative mind. I do not believe that Mr. Woerishoffer ever undertook a speculation of any sort until he had carefully calculated all the chancesproandcon, and his success, remarkable as it was, was largely due to the combination of calculation and the natural development of business conditions, of which he was a close student.
Mr. Woerishoffer’s conception of business principles was iconoclastic to an intense degree. As a broker, as a business man, as an operator in stocks, he “believed in nothing;” that is to say, he was a believer in the failures of men, and had no faith in the corporations and enterprises which were organized for the purpose of the development of the best interests of the country in which he lived. There is another view, or another statement of this peculiar feature, of the character of this man which may be given in description, and this is illustrative of the careful study he made of everything passing along in the lines of life with which he was connected. It is this: That Mr. Woerishoffer, by his intimate study of the prospects and probabilities of the projected plans of enterprising Americans, had come to the conclusion that the majority of them must fail, and that the first flush of enterprise would be changed to a darker shade as time progressed. That is to say, he saw and knew a great deal of the organization of the railroadschemes which have marked the growth of our rapid development in a business way, and he judged that the inflated ideas of the projectors must meet with a check as developments were made, and that the earning capacity of the roads would not equal expectations. Hence he sold the stocks, and sold them right and left from the start, and with his followers reaped the profits. Woerishoffer never indulged in thefinesseof Gould or Henry N. Smith. He had the German ideas of open fight, and he attacked everything indiscriminately, losing money sometimes, but making money at other times, and by his open dash and persistency carried his point.
There is no doubt that the successful career of a man of this sort has a deleterious effect upon those who follow him in succeeding generations. It does not matter how successful the development of the business industries of this country may be hereafter, there will always be found men who will speculate upon the ruination rather than the success of the best interests of the country merely because Charles F. Woerishoffer lived and made a fortune by his disbelief and his disregard of the growth of the institutions of the country which gave him a home.
Woerishoffer was a wonderful example of the sudden rise and steady and rapid progress of a man of strong and tenacious purpose, who adheres with firmness to one line of action or business. He was born in Germany. Woerishoffer’s Wall Street career was begun in the office of August Rutten, afterwards of the firm of Rutten & Bond, in which Woerishoffer subsequently became Cashier. He left this firm in 1867, and joined M. C. Klingenfeldt. Mr. Budge, of the firm of Budge, Schutze & Co., in 1868, bought him a seat in the Stock Exchange. Some time after he entered the Board he became acquainted with Mr. Plaat, of the well-known banking firm of L. Von Hoffman & Co. Mr. Woerishoffer was entrusted with the execution of large orders, especially in gold and Government bonds. At that timethe trading in these securities was very large. Afterwards Plaat became an operator himself, and Woerishoffer followed in his footsteps as an apt pupil. Eventually he formed the firm of Woerishoffer & Co., his first partners being Messrs. Schromberg and Schuyler, who made fortunes and retired.
Woerishoffer was connected in enormous operations with some of the magnates of the street; for instance, James R. Keene, Henry N. Smith, D. P. Morgan, Henry Villard, Charles J. Osborn, S. V. White, Addison Cammack, and last, though not least, Jay Gould. He was especially on intimate terms with his great brother bear, Addison Cammack, both speculatively and socially. Besides being a bold operator in the street, Woerishoffer was associated with large railroad schemes, which gave him the inside track in speculation. He was connected with the North River Construction Company, the Northern Pacific, Ontario & Western, West Shore, Denver & Rio Grande, Mexican National, several of the St. Louis Companies, and Oregon Transcontinental. He was originally a rampant bull on these properties until they began to get into trouble, and then he became a furious and unrelenting bear. He smashed and hammered them down right and left. He soon covered his losses, and began to make enormous profits on the short side of the market. On the bonds and stock of the Kansas Pacific, when it became merged in the Union Pacific, it is supposed that Woerishoffer cleared over a million dollars.
Woerishoffer, it seems, was one of the first to propose the building of the Denver & Rio Grande Railroad. On this enterprise he realized immense profits for himself and his friends. The stock rose until it reached 110, and was “puffed” up for higher figures. The public was attracted by the brilliant prospects of immense profits on the long side. Mr. Woerishoffer and friends held large quantities of long stock, but sold out, and afterwards put out a large line of shorts. The bear campaign had Woerishoffer as leader, and, it is said, he succeeded incovering as far down as 40, and some even lower. In 1878, when the market began its great boom on account of the resumption of specie payment and the general prosperity of the country, he organized a combination which bought stocks largely and sold wheat short. On this deal he made large profits, and began to develop into a pretty strong millionaire. He took advantage of the shooting of President Garfield, in 1881, together with his colleagues, Cammack and Smith, to organize a bear raid on a large scale, which was probably one of the chief, although somewhat remote, causes of bringing about the panic of 1884.
The great perspicacity which he had in the deals enumerated failed him in 1885. He thought, as the wheat crop was small, that wheat would go up and stocks would go down, but the very reverse occurred. The disappointment and depression, very probably, resulting from this brought on the aneurism of the heart, which killed the great bear operator, and his death was a fortunate event for Wall Street.
One of the many things which gave Woerishoffer great reputation as a speculator, both here and in Germany and England, was the bold stand he took in the fight for the control of Kansas Pacific against Jay Gould, Russell Sage, and other capitalists, railroad magnates and financiers in 1879. He represented the Frankfort investors, and had engaged to sell a large quantity of Denver extension bonds at 80, to the Gould-Sage syndicate. The syndicate, however, knowing that they had the controlling influence, declared the contract for 80 off, and “came to the conclusion, after examining the road-bed, that the bonds were not worth more than 70,” and they would not take them at a higher figure. Woerishoffer then made a grand flank movement on the little Napoleon of finance and his able lieutenants. He seemed to be greatly put out that they had broken their contract, but did not complain very bitterly. He immediately cabled to the English and German bondholders, and soonsecured a majority of the bonds which the syndicate wanted, and deposited them in the United States Trust Company. He then informed the syndicate that they could not obtain a single bond under par to carry out their great foreclosure scheme. It was this circumstance that caused Frankfort speculators and investors to come so largely into the New York stock market, and that also made English capital flow in freely, speculators throwing off their former timidity. The amount involved in the Gould-Sage syndicate deal was about $6,000,000 of bonds, thus netting Woerishoffer considerably over a million. This deal at once gave him an international reputation as a far-sighted speculator, and this reputation was gained at the expense of Gould and Sage, owing to their disregard of the contract which had been entered into.
Woerishoffer showed great sagacity as a speculator when Henry Villard put forward his immense bubble scheme in Northern Pacific and the Oregons. Although invited to go into the big deal with other millionaire speculators who had taken the Villard bait so freely, Woerishoffer kept prudently aloof, and looked on the players at the Villard checkerboard with equanimity and at a safe distance. He was not then considered of very much account by the men of ample means who so freely subscribed $20,000,000 to the Villard bubble. At the moment when these subscribers were so highly elated with the idea that the Villard fancies were going far up into the hundreds and, perhaps, the thousands, like the bonanzas during the California craze, Woerishoffer boldly sold the whole line “short.” This was a similar stroke of daring to that which James R. Keene had perpetrated on the bonanza kings in the height of their greatest power and anticipations. The Villard syndicate determined to squeeze Woerishoffer out entirely, and for this purpose a syndicate was formed to buy 100,000 shares of stock. There were various millionaires and prominent financiers included in the syndicate. These were the financial powers with which Woerishoffer, small incomparison, had to contend single-handed. The feat that Napoleon performed at Lodi, with his five generals behind him, spiking the Austrian guns which were defended by several regiments, was but a moderate effort in war compared with that which Woerishoffer was called upon to achieve in speculation. He took things very coolly, and with evident unconcern watched the actions of the syndicate. The latter went to work vigorously, and soon obtained 20,000 shares of the stock which they required. It still kept climbing rapidly, and so elated was this speculative syndicate with the success of its plans that it clamored for the additional 80,000 shares, according to the resolution. The speculators thought they were now in the fair way of crushing Woerishoffer, and with a hurrah obtained the 80,000 shares required, but Woerishoffer’s brokers were the men who sold them to the big syndicate. It was not long afterwards that the syndicate felt as if it had been struck by lightning. In a short time the Villard fancies began to tumble. The syndicate was in a quandary, but nothing could be done. It had tried to crush Woerishoffer. He owed it no mercy. The inevitable laws of speculation had to take their course, and the great little bear netted millions of dollars. These events occurred in 1883.
After the Villard disruption, Mr. Woerishoffer became conservative for some time, and was a bull or a bear just as he saw the opportunity to make money. When the West Shore settlement took place he watched the course of events with a keen eye, and was one of the most prominent figures in pushing the upward movement upon the strength of that settlement. His profits on the bull side then were immense. After this he became a chronic and most destructive bear. The reason he assigned for his conversion and change of base was that the net earnings of the railroads were decreasing, and did not justify an advance in prices. He pushed his theory to an extreme, making little or no allowance for the recuperative powers of the country,and the large bear contingent, which he successfully led, seemed to be inspired with his opinions. These opinions, pushed to the extreme, as they were, had a very demoralizing effect upon the stock market, and constituted a potent factor in the depreciation of all values, throwing a depressing influence on speculation, from which it did not recover until many months after Mr. Woerishoffer’s death. The great bear had wonderful skill in putting other operators off the track of his operations by employing a large number of brokers, and by changing his brokers and his base of action so often that speculators were all at sea regarding what he was going to do, and waiting in anxiety for the next move. It was considered remarkable at the time that his death had not a greater influence on the stock market than this result proved. If he had died a week sooner, his death might have created a panic, for he was then short of 200,000 shares of stock. His short accounts had all been covered before the announcement of his death on the Stock Exchange.
Woerishoffer was almost as famous for his generosity as James R. Keene. It is said that he made presents to faithful brokers of over twenty seats, of the value of $25,000 each, in the Stock Exchange. He made a present of a $500 horse to the cabman who drove him daily to and from his office. He was exceedingly generous with his employes. A short time before his death, feeling that the strain from over-mental exertion was beginning to tell on his constitution, he had resolved to visit Europe for the purpose of recuperating, but, like most of our great operators, he had stretched the mental cords too far before making this prudent resolve, and he died at the early age of 43. How many valuable lives would be prolonged if they would take needful rest in time! The death of Woerishoffer should be a solemn warning to Wall Street men who are anxious to heap up wealth too rapidly. His fortune has been variously estimated at from $1,000,000 to $4,000,000. He left a widow and two little daughters.
Woerishoffer had simply the genius for speculation which is uncontrollable, irrespective of consequences to others. He had no intention of hurting anybody, but his methods had the effect of bringing others to ruin all the same. He merely followed the bent of his genius by making money within the limits of the law, and did not care who suffered through his operations. All speculation on the bear side involves the same principle. If there is any difference among speculators, it only consists in degree. Large transactions, like those in which Woerishoffer was engaged, are more severely felt by those who have the misfortune to get “squeezed;” but it all resolves itself into a question of the survival of the fittest.
Woerishoffer’s success in this country seems strange to Americans, but how much stranger it must have seemed to the people of his native town of Henau Hesse-Nassau, where he was born in 1843, in comparative poverty. John Jacob Astor was one of the first of a considerable number of Germans to find this country a veritable new El Dorado, where peasants’ sons, as if by magic, became far wealthier than many of the nobility whom they had, as boys, gazed upon with awe. Who could have foreseen such a career for the poor young German, who came to New York in 1864? He was then in his twenty-first year. He had had some experience in the brokerage business in Frankfort and Paris, but he came here poor. Addison Cammack, who was to become his ally in many a gigantic speculation, was then prominent in the South, where he had favored the cause of the people of his State during the war, and had made a fortune. D. P. Morgan, who was to be another of his speculative associates, had already won a fortune by speculating in cotton in London. Russell Sage counted his wealth by the millions. Jay Gould and Henry N. Smith had gone through the feverish excitement of a Black Friday, and either, in common parlance, could have “bought or sold” the poor young German. Nevertheless, by strange turns in the wheel of fortune,he acquired a financial prestige that enabled him to beard the lion in his den, and snap his fingers at powerful combinations that sought to ruin him. When Henry Villard demanded his resignation as a director in the Oregon Transcontinental Company, on the ground that he had been selling the Villard properties short, the “Baron” (as Woerishoffer was often called) tendered it at once, and flung down the gage of battle in the announcement that he would ruin the head of the Villard system.
Chas. F. Woerishoffer was slightly built, had a light complexion, was under the medium height, and, on the street, might have been taken for a bank clerk. He showed his inborn love of gaming in many ways. He is said to have broken a faro bank at Long Branch twice; he would play at roulette and poker for large stakes. He was kind-hearted and charitable. At Christmas his benefactions to clerks and messenger boys were notable. In the height of a great speculation he sometimes showed extreme nervousness, but during the memorable contest with the Villard party he exhibited the greatest coolness and composure. He was a curious compound of German phlegm and American nervousness. One of the fortunate events in his career was his marriage, in 1875, with Miss Annie Uhl, the step-daughter of Oswald Ottendorfer, the editor and proprietor of the great German organ of New York, theStaats Zeitung, who brought him, it was understood, a fortune of about three hundred thousand dollars.
The following circular to my customers, which I published May 13th, 1886, with special reference to the death of Woerishoffer, and its consequences, I think is worthy of reproduction here:
“The future of the market is going to be a natural one, and will go up and down from natural causes; when this is fully realized there will be no lack of the public taking a hand in it. That element has been crowded out of Wall Street for a long time past, largely due to the fact that itsjudgment to predicate operations has been sat on by brute force. It has been, therefore, made to feel that the market was not one where it was safe to venture. This brute force power came from Woerishoffer, who has for a long time past been the head and front as a leader on the bear side, and was a gigantic wrecker of values. His method was to destroy confidence and hammer the vitality out of every stock on the list which showed symptoms of life, and his power was the more potential, as all the room traders were converted to believe in him and were his followers. His decease leaves, therefore, the entire bear fraternity without any head, and consequently in a state of demoralization, and in a condition not unlike a ship at sea without a rudder. Mr. Woerishoffer was a genial, hospitable man, lovely in character at his own home, true to his friends and generous to a fault, and will, therefore, be a great loss as a gentleman; but so far as the prosperity of the country goes, his death will be the country’s gain. To the fact that Mr. Woerishoffer’s power and influence are no longer felt on the market is almost entirely due the change of front of the situation, which is now one of hopefulness. While he lived the public and half the members of the Board were completely terrorized by the fear of him, and were kept in check from being buyers, however much the position of affairs warranted going on the long side. The bull side of the market has had for a long time past to contend with the bold and ferocious attitude of Mr. Woerishoffer. When the bulls felt justified in making a rally and forcing the market to go their way, when it looked most encouraging, as a result of their efforts, Mr. Woerishoffer would strike their specialty a sledge hammer blow on the head; he would repeat that on every attempt that was made, which finally resulted in discouragement. If ten thousand shares were not ample for that purpose, he would quadruple the quantity; in fact, he has often been known to have outstanding contracts on the short side of the market amounting to 200,000 shares of stock at least. As an operatorhe seemed to be so peculiarly constituted as to know no fear, and would often turn apparent defeat to success by possessing that trait of character. It will be a long time before another such determined and desperate man will appear on the stage to take his place; in the meantime, it will be plainer sailing in Wall Street, besides safer for operators. Mr. Woerishoffer, as an operator, was full of expedients. He put his whole soul into his operations, and not only would he attack the stock market with voraciousness, but he would manipulate every quarter where it would aid him; sometimes it would be in the grain market, sometimes by shipping gold, and sometimes by the manipulation of the London market. He had all the facilities for operation at his fingers’ ends, in fact he commanded the situation to such an extent as to make his power felt. Mr. Cammack, Mr. Woerishoffer’s associate, while usually a bear, is a very different man and not to be feared, for that gentleman usually sells stocks short only on reliable information, and always to a limited extent. If he finds that the market does not go down by the weight of sales, he soon extricates himself at the first loss. In this method of doing business lies his safety. In this way he will sell often 10, 20 or 30 thousand shares of stock and make the turn, but will not, like his late friend Woerishoffer, take a position and stand by it through thick and thin, and browbeat the market indefinitely until it finally goes his way. At the present time, therefore, the bulls have no great power to fear whenever they have merit upon which to predicate their operations. The future will be brighter for Wall Street speculators and investors than it has been for a long period, and with the public who may be expected to come again to the front, greatly increased activity should be the result.”